Why you should prioritize an annual financial review

Staying on track to your financial goals is not always straightforward. Throughout the course of a year, your life and the external environment may change.

One way to stay focused on your goals is through participating in an annual financial review with my team. Here’s why an annual review is a critical touchpoint in managing your overall financial wellbeing and achieving your financial goals.

How an annual financial review can benefit you 

An annual financial review allows you to assess your current financial standing, plan for potential future obstacles and identify opportunities to enhance or maintain your progress toward your financial goals. It’s a chance to:

• Understand the financial implications of recent life changes. A lot can change in a year, and it can be difficult to decipher how life changes — both big and small — may affect your personal financial situation. But an annual review can be a good opportunity to review your situation holistically and make those connections. For example, you may find that you need to rebuild your cash reserve after a major life event.
• Clarify and refine your financial goals. It’s normal for priorities to evolve. An annual financial review is a good time to revisit your financial goals, determine if they still make sense and adjust or add to them, as needed.
• Identify opportunities to keep you on track. An annual review provides you with a regular touchpoint to monitor the progress toward different savings goals and make adjustments that could benefit you. For example, you may determine that a bonus can be allocated as a lump-sum contribution to your IRA. Or perhaps a change to your cash flow allows you to redirect funds to your child’s 529 plan. These refinements can help keep you on track — or even put you ahead of schedule — to reach your financial goals.
• Review your investment portfolio’s performance. An annual review is a good time to assess the performance of your different investment accounts and make any necessary changes. For example, you may determine you want to be more aggressive or conservative in your investing approach, which may require an adjustment to your portfolio’s asset allocation and diversification targets.
• Account for changes in the external environment. There are certain financial factors that are out of your control. For example, the market may experience a downturn, warranting a rebalance of your portfolio, or there may be regulatory changes to the tax code or rules governing retirement accounts. Personalized guidance from a professional can help you make sense of how these external changes could affect your bottom line.

Your annual financial review checklist

To help you prepare for your annual financial review, consider asking yourself the following questions:

• Have you experienced any major changes in your personal life? You may have recently experienced a major life event, such as a marriage, the birth of a child or the loss of a loved one. Or maybe you’ve moved across the country to help care for an aging parent, started a side business or experienced a significant medical event. All these personal changes can have a major impact on your finances and warrants a closer look with guidance from a financial professional.
• Have you seen a fluctuation in income or expenses? Income and expense needs rise and fall over time. If you’ve experienced a change in income or cash flow, you may need to adjust  contributions to, or distributions from, your accounts. For example, if you recently retired, you may have started to receive Social Security payments or required minimum distributions (RMDs) from retirement accounts.
• Has your risk tolerance evolved? It’s common for your tolerance for risk to change, especially as you near retirement. As such, you may need to evolve your investing strategy to help you feel more confident.
• Do you have questions about your investment outcomes? Your investment portfolio is created to help support your financial goals. An annual financial review is a good time to look at how your investments are tracking toward these goals with a professional, who can help you make sense of your portfolio’s performance and recommend any adjustments.
• Are you nearing a financially significant birthday? As you near retirement, there are certain birthdays that are financially important, and you may want to consider bigger financial adjustments when you reach these milestone ages. For example, when you turn 50 years old, you are eligible to make catch-up contributions to certain retirement accounts. Check to see if you have any upcoming retirement milestone birthdays so that you can take action on financial adjustments that could benefit you.

Schedule an annual financial review today

We can conduct an annual financial review with you — as well as meet with you on ongoing basis — to keep you on track to your financial goals.